Which would you rather have? a) $10,000, 20 years from now at 4% interest or b) $10,000 7 years from now if the interest rate is 12%.
What will be an ideal response?
a) $10,000 x 45.64 = $4,564
b) $10,000 x 45.23 = $4,523
The present value of a) is greater than the present value of b).
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